Interest on Housing loan can be claimed as Deduction from House property & also can be included in cost of Acquisition for Capital Gain simultaneously

Tax benefit on home loan interestAssessee claim deduction of Interest on Housing Loan upto Rs. 2 Lakh (from AY 2015-16) to acquire house property u/s 24(b) and simultaneously upon sale of said property, interest already claimed as deduction u/s 24(b) can be added to cost of property for the purpose of computing capital gain.

Chennai Bench of the Income Tax Appellate Tribunal in the case of ACIT v. C. Ramabrahmam (2012) wherein the Tribunal observed the following :

After perusing the above said provisions, we are of the opinion that deduction under section 24(b) and computation of capital gains under section 48 of the “Act” are altogether covered by different heads of income i.e., income from ‘house property’ and ‘capital gains’.

A perusal of both the provisions makes it unambiguous that none of them excludes operative of the other. In other words, a deduction under section 24(b) is claimed when concerned assessee declares income from ‘house property’, whereas, the cost of the same asset is taken into consideration when it is sold and capital gains are computed under section 48.

We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains under section 48 of the “Act”.

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